During the most recent fiscal year, KD Industries had revenues of $400 million and earnings of...
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During the most recent fiscal year, KD Industries had revenues of $400 million and earnings of $30 million. KD has filed a registration statement with the SEC for its IPO. Before it is offered, KD's investment bankers would like to estimate the value of the company using comparable companies. The investment bankers have assembled the following information based on data for other companies in the same industry that have recently gone public. In each case, the ratios are based upon the IPO price. Comparable Company Eenie Meenie Minie Moe 0.8 Price/Earnings 12.4 14.6 16.2 Price/Revenues 20.4 a. Based upon the price/revenue ratio, what would be a reasonable value for KD? b. Based upon the price/earnings ratio, what would be a reasonable value for KD? 1.6 1.4 1.2 During the most recent fiscal year, KD Industries had revenues of $400 million and earnings of $30 million. KD has filed a registration statement with the SEC for its IPO. Before it is offered, KD's investment bankers would like to estimate the value of the company using comparable companies. The investment bankers have assembled the following information based on data for other companies in the same industry that have recently gone public. In each case, the ratios are based upon the IPO price. Comparable Company Eenie Meenie Minie Moe 0.8 Price/Earnings 12.4 14.6 16.2 Price/Revenues 20.4 a. Based upon the price/revenue ratio, what would be a reasonable value for KD? b. Based upon the price/earnings ratio, what would be a reasonable value for KD? 1.6 1.4 1.2
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a To estimate the value of KD Industries based on the pricerevenue ratio we can use the average rati... View the full answer
Related Book For
Modern Advanced Accounting in Canada
ISBN: 978-1259087554
8th edition
Authors: Hilton Murray, Herauf Darrell
Posted Date:
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